Aug 26 (Reuters) — Care.com, a platform for providing in-home care services to children, older adults and pets, agreed to pay $8.5 million to settle U.S. Federal Trade Commission charges it grossly inflated the number of available jobs and made it difficult to cancel memberships.
The settlement with the unit of IAC Inc (IAC.O) was filed on Monday in the federal court in Austin, Texas, and requires a judge’s approval.
It followed tens of thousands of complaints from Care.com customers, including many who thought they canceled memberships but were billed again. The $8.5 million will go toward refunds. Care.com did not admit or deny wrongdoing in agreeing to settle.
The FTC said Care.com enticed customers to buy auto-renewing memberships by overstating the number of jobs, or “gigs,” on its platform and how much people could earn from them.
It said Care.com knew or should have known a significant number of the jobs were unlikely to result in employment.
The FTC said Care.com then “frustrates” customers seeking to cancel by using deceptive website designs, including a “Submit” button that misleads them into believing they canceled, and a “Cancel” button that actually stops the cancellation process.
About 2.9 million U.S. consumers bought Care.com auto-renewing memberships between January 2019 and March 2022.
The settlement requires the Austin-based company to provide a “simple mechanism” for avoiding unwanted renewals, and back up employment claims on its website.
“Care.com used inflated job numbers and baseless earnings claims to lure caregivers onto its platform, and used deceptive design practices to trap consumers in subscriptions,” FTC consumer protection chief Samuel Levine said. “The order announced today puts a stop to these unlawful practices.”
In a statement, Care.com said it settled to keep its focus on helping families and caregivers.
It also said that as child and healthcare costs rise, “it is disappointing that the FTC has chosen to attack trusted businesses who are part of the solution.”